- Scott Brown, chief economist at Raymond James & Associates Inc.
Demand for new US homes increased modestly in September after soaring in August, reaching multi-year peak, the Commerce Department said. Sales of newly built single-family homes in the world's biggest economy rose 0.2% from the previous month to a seasonally adjusted annual rate of 467,000. In August sales surged 15.3% to 466,000, revised downwards from the initial estimate of 504,000 and the figures for the previous two months were also revised down. New home sales, which make up about 8% of the housing market, tend to be volatile month to month and large revisions are not unusual. Compared to September last year, sales rose 17%. Property sector is struggling to regain its footing after activity stalled in the second half of 2013 as Americans find it difficult to obtain mortgages and wages grow barely in line with inflation. The recent decline in borrowing costs is likely to support the residential real estate market, providing a boost to the world's number one economy. As sales rose modestly, the stock of new houses available on the market increased 1.5% to the highest since July 2010.
The housing market is closely watched by Fed policy makers, who are concerned about its tepid recovery. The central bank Chair Janet Yellen said the progress seen in the housing sector was not sufficient, with housing activity levelling off in the wake of last year's increase in mortgage rates.
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